Posted
by
kdawsonon Wednesday September 09, 2009 @05:21AM
from the what-is-this-competition-of-which-you-speak dept.

EthanV2 sends in BBC coverage of the merger plans of Orange and T-Mobile in the UK. "T-Mobile and Orange plan to merge their UK businesses, creating a mobile phone giant with 28.4 million customers. If completed, a deal between Deutsche Telekom's T-Mobile and Orange owner France Telecom would see a firm with sales of €9.4 B (£7.0 B, $13.4 B). It would be the UK's largest provider, overtaking Telefonica's O2, with about 37% of the mobile market. ... However, it is likely that competition authorities in the UK and EU will probe the deal."

Supposedly the new company would have around 37% of the market, which sounds daft given that there are only 60 million people in the UK. What this doesn't account for is the number of people who have both personal mobiles and mobiles supplied by their employers, eg for on-call purposes.

O2 have around 28% and Vodafone 25%, so there isn't that much in it. The issue the regulators seem to have is that the UK market will go from five major (O2, Vodafone, Orange, T-Mobile and 3) players to four, and the merged

What this doesn't account for is the number of people who have both personal mobiles and mobiles supplied by their employers, eg for on-call purposes

And those who have multiple mobile accounts for other reasons. I have two Orange pay-as-you-go accounts that I use only to get the cheap cinema ticket offers that Orange does. My day-to-day account is Vodafone. Because they give SIMs away, and most of us have old handsets lying around, having multiple accounts like this can't be uncommon.

Pay £10 for a PAYG SIM, save £7/trip to the cinema on Orange Wednesdays scheme. Get two tickets a year and you're up already. It'd take a lot more trips than that to win on an annual pass, even if they are available.

Probably of more interest is what happens to the subscribers of Virgin, Tesco etc. who effectively get their contacts via T-Mobile. Will their contacts/rates increase/change to Oranges when the deal is complete? Will Orange instead move them onto another plan?

As MVNOs they have contacts with the operators, virgin with tmobile and tesco with O2 but any change in ownership would allow the respective MVNOs to get out of the contract and use a different network, so i doubt there would be much difference in price in the short time. Although the register mentions in the article this maybe a reason why they have decided to do a 50 : 50 merger so the change in ownership clause does not become an issue.

In 2007 we had 71 million handsets [guardian.co.uk] in the UK and the BBC think that the combined company would have 37% market share [bbc.co.uk]. It doesn't look like this would be classed as a monopoly however we could be well on our way to a cartel with only O2 and Vodafone in position to be competitive with the new merged company and 3 basically tied to the new company because of their extensive Network sharing with T-Mobile [theregister.co.uk].

Both the EU and UK (Competition Commission and/or Ofcom) regulators will be paying a great deal of attention to the merger, given the high barriers of entry to the market place (i.e. it's not really possible) and the low number of competitors.

I'm pretty sure that anything over 25% would legally be a monopoly in the UK (I know technically it's not a monopoly, but in a rare case of foresight the monopoplies and mergers laws took into account that 25%+ is enough to distort a market).

The barrier isn't that high as long as the EU keeps doing what it's been doing. MVNO (Mobile Virtual Network Operators) is the new thing, this has already taken off in Denmark for instance, it's fairly cheap to start up and due to regulations you aren't being bled dry by the actual owner of the network. It is however fairly new and quite a few kinks has to be ironed out.

We already have a number of MVNOs in the UK (we had them before the EU started to promote them); Tesco and Virgin spring to mind but the question remains whether they are having a significant effect on the market, they don't seem to have taken a significant market share just yet. If the merger is let through it may well be on the back of mandatory provision (rate + terms) for MVNO by the merged company.

There aren't going to be any more spectrum auctions for a while. Three got in by bidding in the last auction, and they aren't exactly that new to the market. Hutchison Wampoa, the Chinese company that owns Three was the original owner of Orange.

If you read the summary, it is about 37% of the market. There are more cellphones than people in the UK. Pretty much everyone has a cellphone, and a lot of people have more than one - eg work cellphone and personal cellphone.

I have read that such a deal would probably result in a total monopoly on the back end for Ericsson.Thus the networks (Vodafone, O2, Orange-Mobile and Three) could have their operating costs pushed up, which would be passed on to the consumer.

However, it is likely that competition authorities in the UK and EU will probe the deal.

Is there ever any news of mergers that hit Slashdot that aren't probed by the EU?

It tends not to be news if two tiny companies merge to form another small company; that happens all the time without regulators getting involved, it's just not important enough to hit the/. front page.

Seconded. I moved from Orange to T-Mobile, despite the fact I was largely happy with the Orange service, to get the G1. Despite the fact I find corporate monopolies to be scary, this is probably going to work out well for me as a customer; Orange have a better network IMHO than T-Mobile.

I have T-mobile on a sim only deal, and the sim (with 50 minutes call time - any network) costs 6.50 per month. I added unlimited data for 7.50 per month (tethering allowed). I get full speed HSDPA access most places. If they merge with Orange, I wonder who'll be pulling the strings, because I'll be off if they mess with my data plan.

Although I was making a sarcastic point - it's a bunfight for lawyers - this will inevitably result in litigation. It is potentially very anti-competitive. Now, what do you want? A strong European Competition Commission that takes consumer issues seriously and is prepared to take on multinationals who want monopolies, or a weak ECC and the sort of high prices and restrictive contracts that are the norm in the US?

And who do you want in court? Elderly lawyers who don't understand this newfangled mobile phone

3 is not an MVNO. They may have recently set up a network sharing agreement with T-Mobile, but that doesn't make them a virtual network. The basic idea is that all existing T-Mobile 3G towers now transmit both T-Mobile and 3 identifiers, and same goes for the existing 3 ones.

However, their network is a bit patchy, but their data plans aren't too bad - but watch their out-of-bundle rates of 10p/MB on contract or £1/MB on PAYG.

Compare to Orange's "mobile broadband" offering where their bundles might not

The EU tend to be vicious these days with mobile operators, so I'm not really worried about the monopoly aspect.
What I'm pleased about is what this could potentially do to HSPA coverage on our fair Isle.
T-Mobile & Huchinson are already in bed till 2031 in a UMTS Network sharing agreement. Add Orange into the mix and Voda (with their handful of 14.4Mbps coverage spots) don't really look too hot...